One 77-year-old’s search for the truth: 9/11, election fraud, illegal wars, Wall Street criminality, a stolen nuke, the neocon wars, control of the U.S. government by global corporations, the unjustified assault on Social Security, media complicity, and the "Great Recession" about to become the second Great Depression. "The most important truths are hidden from us by the powerful few who strive to steal the American dream by keeping We the People in the dark."

Wednesday, March 31, 2010

Two and a half years ago, I deduced that a false-flag attack on Iran using a purloined nuclear-armed cruise missile had been narrowly averted -- and that, had it not been, the Iranian retaliation using anti-ship missiles would have sunk the entire U.S. Fifth Fleet in the Persian Gulf within hours. Today, we read in the news that "Obama and other world leaders press Iran on its nuclear program." And as best as I can determine, the Fifth Fleet has been withdrawn from the "ducks-in-a-barrel" Gulf to the relative safety of the North Arabian Sea. Looking to what else I might mention in this context, I went to YouTube in search of an embeddable copy of the famous video showing John McCain doing his flagrant "Bomb, bomb, bomb Iran" Karaoke routine, only to discover that most had been removed and those that remain had been neutered by cutting them down to short clips that come across as a playful off-the-cuff gag lasting only a couple seconds. Now take a look at the following article, which appeared a couple weeks ago, ask yourself what you think War-President-II is up to now.

Final destination Iran?

Hundreds of powerful US “bunker-buster” bombs are being shipped from California to the British island of Diego Garcia in the Indian Ocean in preparation for a possible attack on Iran.

The Sunday Herald can reveal that the US government signed a contract in January to transport 10 ammunition containers to the island. According to a cargo manifest from the US navy, this included 387 “Blu” bombs used for blasting hardened or underground structures.

Experts say that they are being put in place for an assault on Iran’s controversial nuclear facilities. There has long been speculation that the US military is preparing for such an attack, should diplomacy fail to persuade Iran not to make nuclear weapons.

Although Diego Garcia is part of the British Indian Ocean Territory, it is used by the US as a military base under an agreement made in 1971. The agreement led to 2,000 native islanders being forcibly evicted to the Seychelles and Mauritius.

The Sunday Herald reported in 2007 that stealth bomber hangers on the island were being equipped to take bunker-buster bombs.

They are gearing up totally for the destruction of Iran Dan Plesch, director, Centre for International Studies and Diplomacy, University of London

Although the story was not confirmed at the time, the new evidence suggests that it was accurate.

Contract details for the shipment to Diego Garcia were posted on an international tenders’ website by the US navy.

A shipping company based in Florida, Superior Maritime Services, will be paid $699,500 to carry many thousands of military items from Concord, California, to Diego Garcia.

“They are gearing up totally for the destruction of Iran,” said Dan Plesch, director of the Centre for International Studies and Diplomacy at the University of London, co-author of a recent study on US preparations for an attack on Iran. “US bombers are ready today to destroy 10,000 targets in Iran in a few hours,” he added.

The preparations were being made by the US military, but it would be up to President Obama to make the final decision. He may decide that it would be better for the US to act instead of Israel, Plesch argued.

“The US is not publicising the scale of these preparations to deter Iran, tending to make confrontation more likely,” he added. “The US ... is using its forces as part of an overall strategy of shaping Iran’s actions.”

According to Ian Davis, director of the new independent thinktank, Nato Watch, the shipment to Diego Garcia is a major concern. “We would urge the US to clarify its intentions for these weapons, and the Foreign Office to clarify its attitude to the use of Diego Garcia for an attack on Iran,” he said.

For Alan Mackinnon, chair of Scottish CND, the revelation was “extremely worrying”. He stated: “It is clear that the US government continues to beat the drums of war over Iran, most recently in the statements of Secretary of State, Hillary Clinton.

“It is depressingly similar to the rhetoric we heard prior to the war in Iraq in 2003.”

The British Ministry of Defence has said in the past that the US government would need permission to use Diego Garcia for offensive action. It has already been used for strikes against Iraq during the 1991 and 2003 Gulf wars.

About 50 British military staff are stationed on the island, with more than 3,200 US personnel. Part of the Chagos Archipelago, it lies about 1,000 miles from the southern coasts of India and Sri Lanka, well placed for missions to Iran.

The US Department of Defence did not respond to a request for a comment.

In Defense of Deficits

March 4, 2010

The Simpson-Bowles Commission, just established by the president, will no doubt deliver an attack on Social Security and Medicare dressed up in the sanctimonious rhetoric of deficit reduction. (Back in his salad days, former Senator Alan Simpson was a regular schemer to cut Social Security.) The Obama spending freeze is another symbolic sacrifice to the deficit gods. Most observers believe neither will amount to much, and one can hope that they are right. But what would be the economic consequences if they did? The answer is that a big deficit-reduction program would destroy the economy, or what remains of it, two years into the Great Crisis.

For this reason, the deficit phobia of Wall Street, the press, some economists and practically all politicians is one of the deepest dangers that we face. It's not just the old and the sick who are threatened; we all are. To cut current deficits without first rebuilding the economic engine of the private credit system is a sure path to stagnation, to a double-dip recession--even to a second Great Depression. To focus obsessively on cutting future deficits is also a path that will obstruct, not assist, what we need to do to re-establish strong growth and high employment.

To put things crudely, there are two ways to get the increase in total spending that we call "economic growth." One way is for government to spend. The other is for banks to lend. Leaving aside short-term adjustments like increased net exports or financial innovation, that's basically all there is. Governments and banks are the two entities with the power to create something from nothing. If total spending power is to grow, one or the other of these two great financial motors--public deficits or private loans--has to be in action.

For ordinary people, public budget deficits, despite their bad reputation, are much better than private loans. Deficits put money in private pockets. Private households get more cash. They own that cash free and clear, and they can spend it as they like. If they wish, they can also convert it into interest-earning government bonds or they can repay their debts. This is called an increase in "net financial wealth." Ordinary people benefit, but there is nothing in it for banks.

And this, in the simplest terms, explains the deficit phobia of Wall Street, the corporate media and the right-wing economists. Bankers don't like budget deficits because they compete with bank loans as a source of growth. When a bank makes a loan, cash balances in private hands also go up. But now the cash is not owned free and clear. There is a contractual obligation to pay interest and to repay principal. If the enterprise defaults, there may be an asset left over--a house or factory or company--that will then become the property of the bank. It's easy to see why bankers love private credit but hate public deficits.

All of this should be painfully obvious, but it is deeply obscure. It is obscure because legions of Wall Streeters--led notably in our time by Peter Peterson and his front man, former comptroller general David Walker, and including the Robert Rubin wing of the Democratic Party and numerous "bipartisan" enterprises like the Concord Coalition and the Committee for a Responsible Federal Budget--have labored mightily to confuse the issues. These spirits never uttered a single word of warning about the financial crisis, which originated on Wall Street under the noses of their bag men. But they constantly warn, quite falsely, that the government is a "super subprime" "Ponzi scheme," which it is not.

We also hear, from the same people, about the impending "bankruptcy" of Social Security, Medicare--even the United States itself. Or of the burden that public debts will "impose on our grandchildren." Or about "unfunded liabilities" supposedly facing us all. All of this forms part of one of the great misinformation campaigns of all time.

The misinformation is rooted in what many consider to be plain common sense. It may seem like homely wisdom, especially, to say that "just like the family, the government can't live beyond its means." But it's not. In these matters the public and private sectors differ on a very basic point. Your family needs income in order to pay its debts. Your government does not.

Private borrowers can and do default. They go bankrupt (a protection civilized societies afford them instead of debtors' prisons). Or if they have a mortgage, in most states they can simply walk away from their house if they can no longer continue to make payments on it.

With government, the risk of nonpayment does not exist. Government spends money (and pays interest) simply by typing numbers into a computer. Unlike private debtors, government does not need to have cash on hand. As the inspired amateur economist Warren Mosler likes to say, the person who writes Social Security checks at the Treasury does not have the phone number of the tax collector at the IRS. If you choose to pay taxes in cash, the government will give you a receipt--and shred the bills. Since it is the source of money, government can't run out.

It's true that government can spend imprudently. Too much spending, net of taxes, may lead to inflation, often via currency depreciation--though with the world in recession, that's not an immediate risk. Wasteful spending--on unnecessary military adventures, say--burns real resources. But no government can ever be forced to default on debts in a currency it controls. Public defaults happen only when governments don't control the currency in which they owe debts--as Argentina owed dollars or as Greece now (it hasn't defaulted yet) owes euros. But for true sovereigns, bankruptcy is an irrelevant concept. When Obama says, even offhand, that the United States is "out of money," he's talking nonsense--dangerous nonsense. One wonders if he believes it.

Nor is public debt a burden on future generations. It does not have to be repaid, and in practice it will never be repaid. Personal debts are generally settled during the lifetime of the debtor or at death, because one person cannot easily encumber another. But public debt does not ever have to be repaid. Governments do not die--except in war or revolution, and when that happens, their debts are generally moot anyway.

So the public debt simply increases from one year to the next. In the entire history of the United States it has done so, with budget deficits and increased public debt on all but about six very short occasions--with each surplus followed by a recession. Far from being a burden, these debts are the foundation of economic growth. Bonds owed by the government yield net income to the private sector, unlike all purely private debts, which merely transfer income from one part of the private sector to another.

Nor is that interest a solvency threat. A recent projection from the Center on Budget and Policy Priorities, based on Congressional Budget Office assumptions, has public-debt interest payments rising to 15 percent of GDP by 2050, with total debt to GDP at 300 percent. But that can't happen. If the interest were paid to people who then spent it on goods and services and job creation, it would be just like other public spending. Interest payments so enormous would affect the economy much like the mobilization for World War II. Long before you even got close to those scary ratios, you'd get full employment and rising inflation--pushing up GDP and, in turn, stabilizing the debt-to-GDP ratio. Or the Federal Reserve would stabilize the interest payouts, simply by keeping short-term interest rates (which it controls) very low.

What about indebtedness to foreigners? True, foreigners do us a favor by buying our bonds. To acquire them, China must export goods to us, not offset by equivalent imports. That is a cost to China. It's a cost Beijing is prepared to pay, for its own reasons: export industries promote learning, technology transfer and product quality improvement, and they provide jobs to migrants from the countryside. But that's China's business.

For China, the bonds themselves are a sterile hoard. There is almost nothing that Beijing can do with them. China already imports all the commodities and machinery and aircraft it can use--if it wanted more, it would buy them now. So unless China changes its export policy, its stock of T bonds will just go on growing. And we will pay interest on it, not with real effort but by typing numbers into computers. There is no burden associated with this, not now and not later. (If the Chinese hoard the interest, they also don't help much with job creation here. So the fact that we're buying a lot of goods from China simply means we have to be more imaginative, and bolder, if we want to create all the jobs we need.) Finally, could China dump its dollars? In principle it could, substituting Greek bonds for American and overpriced euros for cheap dollars. On brief reflection, no Beijing bureaucrat is likely to think this a smart move.

What is true of government as a whole is also true of particular programs. Social Security and Medicare are government programs; they cannot go bankrupt, and they cannot fail to meet their obligations unless Congress decides--say on the recommendation of the Simpson-Bowles Commission--to cut the benefits they provide. The exercise of linking future benefits and projected payroll tax revenues is an accounting farce, done for political reasons. That farce was started by FDR as a way of protecting Social Security from cuts. But it has become a way of creating needless anxiety about these programs and of precluding sensible reforms, like expanding Medicare to those 55 and older, or even to the whole population.

Social Security and Medicare are transfer programs. What they do, mainly, is move resources around within our society at a given time. The principal transfer is not from the young to the old, since even without Social Security the old would still be around and someone would have to support them. Rather, Social Security pools resources, so that the work of the young collectively supports the senior population. The effective transfer is from parents who have children who would otherwise support them (a fairly rare thing), to seniors who don't. And it is from workers who do not have parents to support, to workers who would otherwise have to support their parents. In both cases this burden sharing is fair, progressive and sustainable. There is a healthcare cost problem, as everyone knows, but that's not a Medicare problem. It should not be solved by cutting back on healthcare for the old. Social Security and Medicare also replace private insurance with cheap and efficient public administration. This is another reason these programs are the hated targets, decade after decade, of the worst predators on Wall Street.

Public deficits and private lending are reciprocal. Increased private lending generates new tax revenue and smaller deficits; that's what happened in the 1990s. A credit collapse kills the tax base and generates more spending; that's what's happening now, and our big deficits are the accounting counterpart of the massive decline, last year, in private bank loans. The only choice is what kind of deficit to run--useful deficits that rebuild the country, as in the New Deal, or useless ones, with millions kept unnecessarily on unemployment insurance when they could instead be given jobs.

If we could revive private lending, should we do it? Well, yes, up to a point there is good reason to have a robust private lending sector. Government is by nature centralized and policy driven. It works by law and regulation. Decentralized and competitive private banks have much more flexibility. A good banking system, run by capable people with good business judgment who know their clients, is good for the economy. The fact that you have to pay interest on a loan is also an important motivator of investment over consumption.

But right now, we don't have functional big banks. We have a cartel run by an incompetent plutocracy, with its long fingers deep in the pockets of the state. For functional credit to return, we'll have to reduce the unpayable private debts now outstanding, to restore private incomes (meaning: create jobs) and collateral (meaning: home values), and we'll have to restructure the big banks. We need to break them up, shrink the financial sector overall, expose and prosecute frauds, and create incentives for profitable lending in energy conservation, infrastructure and other sectors. Or we could create a new parallel banking system, as was done in the New Deal with the Reconstruction Finance Corporation and its spinoffs, including the Home Owners' Loan Corporation and later Fannie Mae and Freddie Mac.

Either way, until we have effective financial reform, public budget deficits are the only way toward economic growth. You don't have to like budget deficits to realize that we must have them, on whatever scale necessary to restore growth and jobs. And we will need them not just now but for a long while, until we've shaped a strategic program for investment, energy and the environment, financed in part by a reformed, restored and disciplined financial sector.

It's possible, of course, that all the deficit hysteria is intended to divert attention from the dysfunctions of private banking, and so to help thwart calls for financial reform. Is that giving them too much credit? Maybe. Maybe not.

About James K. Galbraith

James K. Galbraith is the author of The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too. He teaches at the LBJ School of Public Affairs at the University of Texas and is a senior scholar at the Levy Economics Institute. more...

Alan Greenspan and the New York Times Are Gunning for Your Social Security

With health care reform finally signed into law, a new policy battle over Social Security is quietly but unquestionably building momentum. Make no mistake -- Wall Street is now doing its best to gut Social Security, and as a front-page article in yesterday's New York Times makes clear, the media is not ready to challenge them on it.

Like every other major institution in the public and private sectors, Social Security has taken a few licks from the current recession. But the problems are simply not very serious -- the entitlement program's trust fund currently stands at a massive $2.5 trillion -- that's trillion with a "t." If the federal government makes absolutely no changes to Social Security whatsoever, the program is currently projected to remain fiscally fit through 2037. The effects of the recession are included in that projection -- prior to the financial crash of 2008, Social Security was projected to remain solvent through 2041.

But pesky facts like that are not the focus of the story from Times reporter Mary Williams Walsh, who instead highlights a fundamentally meaningless statistic to needlessly frighten her readers:

This year, the system will pay out more in benefits than it receives in payroll taxes, an important threshold it was not expected to cross until at least 2016.

That threshold would indeed be important -- if Social Security weren't sitting on an additional $2.5 trillion. Walsh dismisses the trust fund -- putting the term in scare quotes and calling it a mere "accounting device." And, in fact, the trust fund is an accounting device -- just like bank reserves and dozens of other financial metrics used in the business world. What that accounting device shows is that Social Security is fundamentally stable from a fiscal standpoint, to the tune of $2.5 trillion. There's nothing fishy about it.

If that $2.5 trillion ever runs out -- which it won't, because Social Security's revenues will increase in a few years as the economy recovers -- policymakers would still actually have plenty of options available for boosting the program. But according to former Federal Reserve Chairman Alan Greenspan, there's only one truly viable course of action -- draconian benefit cuts for seniors. Here's the Maestro, from Walsh's article:

When the level of the trust fund gets to zero, you have to cut benefits . . . . Because of the size of the contraction in economic activity, unless we get an immediate and sharp recovery, the revenues of the trust fund will be tracking lower for a number of years.

Greenspan, lest anyone forget, is one of the people most responsible for moving Social Security's solvency projections from 2041 to 2037. Our current recession was caused by rampant financial excesses that Greenspan actively refused to regulate and a housing bubble that he explicitly refused to act on. To the extent that today's government finances are constrained, the two major culprits can both be laid at Greenspan's feet -- the bank bailouts that were deployed to clean up his mess, and the lost tax revenues from job losses and plunging home values.

So it should come as no surprise that Greenspan is simply wrong about even the hypothetical need for benefit cuts. If -- under a wild, unthinkable set of economic circumstances -- Social Security did one day find itself in a fiscal hole, the government could always simply increase Social Security taxes or tap revenues from other government programs. In fact, when Greenspan himself was part of a commission to fix Social Security in the early 1980s, that commission did not cut benefits -- it raised taxes. Policymakers would not need to cut benefits -- Greenspan simply prefers that they do, because he doesn't like the idea that the government should be providing safety nets for the elderly.

That's a perspective shared by Wall Street billionaires like Peter Peterson, who has pledged a massive fortune to spreading the message: Save the bankers and brokers first -- everyone else, including seniors, is expendable. Peterson and Greenspan have allies in the newspaper business and on cable television that are ready and willing to place this agenda at the forefront of the public debate. The Washington Post now even publishes Social Security hit pieces posing as news articles that are funded by Peterson, parading under the banner of the Fiscal Times. As we move into the midterm elections, and Republicans raise the specter of budget deficits and national debt that have increased thanks to their own predatory economic policies, we can expect more of this Social Security fear-mongering. But we shouldn't take the bait. There is no Social Security crisis.

Zach Carter is an economics editor at AlterNet. He writes a weekly blog on the economy for the Media Consortium and his work has appeared in the Nation, Mother Jones, the American Prospect and Salon.

Saturday, March 27, 2010

Monday, March 15, 2010

Allen L Roland http://allenlrolandsweblog.blogspot.comIn their quest for the truth ~ over 60,000 infuriated Greek citizens take to the streets in central Athens because the cash strapped government faces a financial reckoning. The Obama administration has prepared itself for eventually the same demands for the truth with HR 645 which is, in essence, militarized FEMA internment camps: Allen L Roland

It's only a matter of time before the American people take to the streets particularly when they realize the full extent of cash strapped America's indebtedness as well as the financial backlash of Wall Street's ponzi scheme of offshore derivatives which has also brought Greece to its knees. We are talking trillions of dollars here. Meanwhile the U.S. Defense budget for 2011 will go up 7.1% .

Robert Reich, RobertReich.org, writes of the present sham recovery ~ "Are we finally in a recovery? Who's 'we,' kemosabe? Big global companies, Wall Street, and high-income Americans who hold their savings in financial instruments are clearly doing better. As to the rest of us – small businesses along Main Streets, and middle and lower-income Americans ~ forget it." http://www.truthout.org/the-sham-recovery57638

Since the Obama administration is just as committed as the Bush administration to shielding the American public from honestly disclosing the full extent of its indebtedness ~ relying instead on a bank bailout buoyed mini recovery with the hopes of re-inflating the same debt bubble that just burst ~ it's just a matter of time before infuriated American citizens realize what has really happened and take to the streets.

Michel Chossudovsky spelled it out the consequences on March 18, 2009 Global Research , in an article entitled Preparing for Civil Unrest in America Legislation to Establish Internment Camps on US Military Bases

Excerpt:" A bill entitled the National Emergency Centers Establishment Act (HR 645) was introduced in the US Congress in January. It calls for the establishment of six national emergency centers in major regions in the US to be located on existing military installations. http://www.govtrack.us/congress/billtext.xpd?bill=h111-645

The stated purpose of the "national emergency centers" is to provide "temporary housing, medical, and humanitarian assistance to individuals and families dislocated due to an emergency or major disaster." In actuality, what we are dealing with are FEMA internment camps. HR 645 states that the camps can be used to "meet other appropriate needs, as determined by the Secretary of Homeland Security."

There has been virtually no press coverage of HR 645. These "civilian facilities" on US military bases are to be established in cooperation with the US Military. Modeled on Guantanamo, what we are dealing with is the militarization of FEMA internment facilities.

Once a person is arrested and interned in a FEMA camp located on a military base, that person would in all likelihood, under a national emergency, fall under the de facto jurisdiction of the Military: civilian justice and law enforcement including habeas corpus would no longer apply.

HR 645 bears a direct relationship to the economic crisis and the likelihood of mass protests across America. It constitutes a further move to militarize civilian law enforcement, repealing the Posse Comitatus Act. "

Theodore Roosevelt once said that Honesty is the prerequisite for a strong and healthy Republic and our government, in that sense, obviously does not trust the people it represents with the truth ~ "We cannot afford to differ on the question of honesty if we expect our republic permanently to endure. Honesty is not so much a credit as an absolute prerequisite to efficient service to the public. Unless a man is honest, we have no right to keep him in public life; it matters not how brilliant his capacity.": Theodore Roosevelt - (1858-1919) 26th US President

We are no longer a Republic, we are now a Oligarchy where corporations now have tremendous financial and political leverage and their deepest fear is an informed, angry and rebellious public seeking the truth.

Take to the streets but be forewarned ~ the chips are increasingly being stacked against us.

"During times of universal deceit, telling the truth becomes a revolutionary act."George Orwell

March 24, 2010 "Information Clearing House" -- There was a time when the pen was mightier than the sword. That was a time when people believed in truth and regarded truth as an independent power and not as an auxiliary for government, class, race, ideological, personal, or financial interest.

Today Americans are ruled by propaganda. Americans have little regard for truth, little access to it, and little ability to recognize it.

Truth is an unwelcome entity. It is disturbing. It is off limits. Those who speak it run the risk of being branded “anti-American,” “anti-semite” or “conspiracy theorist.”

Truth is an inconvenience for government and for the interest groups whose campaign contributions control government.

Truth is an inconvenience for prosecutors who want convictions, not the discovery of innocence or guilt.

Truth is inconvenient for ideologues.

Today many whose goal once was the discovery of truth are now paid handsomely to hide it. “Free market economists” are paid to sell offshoring to the American people. High-productivity, high value-added American jobs are denigrated as dirty, old industrial jobs. Relicts from long ago, we are best shed of them. Their place has been taken by “the New Economy,” a mythical economy that allegedly consists of high-tech white collar jobs in which Americans innovate and finance activities that occur offshore. All Americans need in order to participate in this “new economy” are finance degrees from Ivy League universities, and then they will work on Wall Street at million dollar jobs.

Economists who were once respectable took money to contribute to this myth of “the New Economy.”

And not only economists sell their souls for filthy lucre. Recently we have had reports of medical doctors who, for money, have published in peer-reviewed journals concocted “studies” that hype this or that new medicine produced by pharmaceutical companies that paid for the “studies.”

The Council of Europe is investigating big pharma’s role in hyping a false swine flu pandemic in order to gain billions of dollars in sales of the vaccine.

The media helped the US military hype its recent Marja offensive in Afghanistan, describing Marja as a city of 80,000 under Taliban control. It turns out that Marja is not urban but a collection of village farms.

And there is the global warming scandal, in which climate scientists, financed by Wall Street and corporations anxious to get their mitts on “cap and trade” and by a U.N. agency anxious to redistribute income from rich to poor countries, concocted a doomsday scenario in order to create profit in pollution.

Wherever one looks, truth has fallen to money.

Wherever money is insufficient to bury the truth, ignorance, propaganda, and short memories finish the job.

I remember when, following CIA director William Colby’s testimony before the Church Committee in the mid-1970s, presidents Gerald Ford and Ronald Reagan issued executive orders preventing the CIA and U.S. black-op groups from assassinating foreign leaders. In 2010 the US Congress was told by Dennis Blair, head of national intelligence, that the US now assassinates its own citizens in addition to foreign leaders.

When Blair told the House Intelligence Committee that US citizens no longer needed to be arrested, charged, tried, and convicted of a capital crime, just murdered on suspicion alone of being a “threat,” he wasn’t impeached. No investigation pursued. Nothing happened. There was no Church Committee. In the mid-1970s the CIA got into trouble for plots to kill Castro. Today it is American citizens who are on the hit list. Whatever objections there might be don’t carry any weight. No one in government is in any trouble over the assassination of U.S. citizens by the U.S. government.

As an economist, I am astonished that the American economics profession has no awareness whatsoever that the U.S. economy has been destroyed by the offshoring of U.S. GDP to overseas countries. U.S. corporations, in pursuit of absolute advantage or lowest labor costs and maximum CEO “performance bonuses,” have moved the production of goods and services marketed to Americans to China, India, and elsewhere abroad. When I read economists describe offshoring as free trade based on comparative advantage, I realize that there is no intelligence or integrity in the American economics profession.

Intelligence and integrity have been purchased by money. The transnational or global U.S. corporations pay multi-million dollar compensation packages to top managers, who achieve these “performance awards” by replacing U.S. labor with foreign labor. While Washington worries about “the Muslim threat,” Wall Street, U.S. corporations and “free market” shills destroy the U.S. economy and the prospects of tens of millions of Americans.

Americans, or most of them, have proved to be putty in the hands of the police state.

Americans have bought into the government’s claim that security requires the suspension of civil liberties and accountable government. Astonishingly, Americans, or most of them, believe that civil liberties, such as habeas corpus and due process, protect “terrorists,” and not themselves. Many also believe that the Constitution is a tired old document that prevents government from exercising the kind of police state powers necessary to keep Americans safe and free.

Most Americans are unlikely to hear from anyone who would tell them any different.

I was associate editor and columnist for the Wall Street Journal. I was Business Week’s first outside columnist, a position I held for 15 years. I was columnist for a decade for Scripps Howard News Service, carried in 300 newspapers. I was a columnist for the Washington Times and for newspapers in France and Italy and for a magazine in Germany. I was a contributor to the New York Times and a regular feature in the Los Angeles Times. Today I cannot publish in, or appear on, the American “mainstream media.”

For the last six years I have been banned from the “mainstream media.” My last column in the New York Times appeared in January, 2004, coauthored with Democratic U.S. Senator Charles Schumer representing New York. We addressed the offshoring of U.S. jobs. Our op-ed article produced a conference at the Brookings Institution in Washington, D.C. and live coverage by C-Span. A debate was launched. No such thing could happen today.

For years I was a mainstay at the Washington Times, producing credibility for the Moony newspaper as a Business Week columnist, former Wall Street Journal editor, and former Assistant Secretary of the U.S. Treasury. But when I began criticizing Bush’s wars of aggression, the order came down to Mary Lou Forbes to cancel my column.

The American media does not serve the truth. It serves the government and the interest groups that empower the government.

America’s fate was sealed when the public and the anti-war movement bought the government’s 9/11 conspiracy theory. The government’s account of 9/11 is contradicted by much evidence. Nevertheless, this defining event of our time, which has launched the US on interminable wars of aggression and a domestic police state, is a taboo topic for investigation in the media. It is pointless to complain of war and a police state when one accepts the premise upon which they are based.

These trillion dollar wars have created financing problems for Washington’s deficits and threaten the U.S. dollar’s role as world reserve currency. The wars and the pressure that the budget deficits put on the dollar’s value have put Social Security and Medicare on the chopping block. Former Goldman Sachs chairman and U.S. Treasury Secretary Hank Paulson is after these protections for the elderly. Fed chairman Bernanke is also after them. The Republicans are after them as well. These protections are called “entitlements” as if they are some sort of welfare that people have not paid for in payroll taxes all their working lives.

With over 21 percent unemployment as measured by the methodology of 1980, with American jobs, GDP, and technology having been given to China and India, with war being Washington’s greatest commitment, with the dollar over-burdened with debt, with civil liberty sacrificed to the “war on terror,” the liberty and prosperity of the American people have been thrown into the trash bin of history.

The militarism of the U.S. and Israeli states, and Wall Street and corporate greed, will now run their course. As the pen is censored and its might extinguished, I am signing off.

Paul Craig Roberts was Assistant Secretary of the Treasury during President Reagan’s first term. He was Associate Editor of the Wall Street Journal. He has held numerous academic appointments, including the William E. Simon Chair, Center for Strategic and International Studies, Georgetown University, and Senior Research Fellow, Hoover Institution, Stanford University. He was awarded the Legion of Honor by French President Francois Mitterrand.

The Association of Community Organizations for Reform Now (ACORN) aims to organize a majority consituency of low- to moderate-income people across the United States. The members of ACORN take on issues of relevance to their communities, whether those issues are discrimination, affordable housing, a quality education, or better public services. ACORN believes that low- to moderate-income people are the best advocates for their communities, and so ACORN's low- to moderate-income members act as leaders, spokespeople, and decision-makers within the organization.

This doesn't sound so bad to me ...but then I'm neither a right wingnut nor a vulture capitalist.

Anyway, today's report of ACORN's demise follows the January 21, 2010 Supreme Court Decision that corporations have First Amendment rights and so can spend as much money as they choose to back their favorite "business friendly" candidate for high office. I put "business friendly" in quotes here, because I'm not talking about the typical business that provides quality goods and services at competitive prices. I'm totally in favor of this sort of business.

CHICAGO -- The once mighty community activist group ACORN announced Monday it is folding amid falling revenues - six months after video footage emerged showing some of its workers giving tax tips to conservative activists posing as a pimp and prostitute.

"It's really declining revenue in the face of a series of attacks from partisan operatives and right-wing activists that have taken away our ability to raise the resources we need," ACORN spokesman Kevin Whelan said.

Several of its largest affiliates, including ACORN New York and ACORN California, broke away this year and changed their names in a bid to ditch the tarnished image of their parent organization and restore revenue that ran dry in the wake of the video scandal.

ACORN's financial situation and reputation went into free fall within days of the videos' release in September. Congress reacted by yanking ACORN's federal funding, private donors held back cash and scores of ACORN offices closed.

Earlier this month, a U.S. judge reiterated an earlier ruling that the federal law blacklisting ACORN and groups allied with it was unconstitutional because it singled them out. But that didn't mean any money would be automatically be restored.

Bertha Lewis, the CEO of ACORN, which stands for the Association of Community Organizations for Reform Now, alluded to financial hardships in a weekend statement as the group's board prepared to deliberate by phone.

"ACORN has faced a series of well-orchestrated, relentless, well-funded right wing attacks that are unprecedented since the McCarthy era," she said. "The videos were a manufactured, sensational story that led to rush to judgment and an unconstitutional act by Congress."

ACORN's board decided to close remaining state affiliates and field offices by April 1 because of falling revenues, with some national operations will continue operating for at least several weeks before shutting for good, Whelan said Monday.

For years, ACORN could draw on 400,000 members to lobby for liberal causes, such as raising the minimum wage or adopting universal health care. ACORN was arguably most successful at registering hundreds of thousands of low-income voters, though that mission was dogged by fraud allegations, including that some workers submitted forms signed by 'Mickey Mouse' or other cartoon characters.

Now, folks, please focus on the last phrase of the last sentence above. The "mainstream media" in general -- and Fox News in particular -- have been hammering ACORN for years for committing "voter fraud" (despite the fact that no ACORN member has been charged with such a thing). The fact is that, if an organization carries out a voter registration drive, it would be a felony not to turn in all voter registrations, even ones signed by "Mickey Mouse" ...occurrences of which were likely due to political operatives bent on sabotage, like for example that committed recently by James O'Keefe (go here and scroll through the entire series of photos).

What IS a felony, however, is to register voters and then tear up the registrations of those who declare themselves members of the party you want to loose. And the people who were actually charged with doing this very thing in the run-up to the 2004 Election were operatives employed by master dirty trickster Nathan Sproul who was paid over $8 million for his efforts ...by the GOP.

Question of the day (purely rhetorical, of course):
Why didn't the "mainstream media" put this story ahead of the simultaneously unfolding frame-up of ACORN?

Thanks to last night's vote, that child of yours who has had asthma since birth will now be covered after suffering for her first nine years as an American child with a pre-existing condition.

Thanks to last night's vote, that 23-year-old of yours who will be hit one day by a drunk driver and spend six months recovering in the hospital will now not go bankrupt because you will be able to keep him on your insurance policy.

Thanks to last night's vote, after your cancer returns for the third time -- racking up another $200,000 in costs to keep you alive -- your insurance company will have to commit a criminal act if they even think of dropping you from their rolls.

Yes, my Republican friends, even though you have opposed this health care bill, we've made sure it is going to cover you, too, in your time of need. I know you're upset right now. I know you probably think that if you did get wiped out by an illness, or thrown out of your home because of a medical bankruptcy, that you would somehow pull yourself up by your bootstraps and survive. I know that's a comforting story to tell yourself, and if John Wayne were still alive I'm sure he could make that into a movie for you.

But the reality is that these health insurance companies have only one mission: To take as much money from you as they can -- and then work like demons to deny you whatever coverage and help they can should you get sick.

So, when you find yourself suddenly broadsided by a life-threatening illness someday, perhaps you'll thank those pinko-socialist, Canadian-loving Democrats and independents for what they did Sunday evening.

If it's any consolation, the thieves who run the health insurance companies will still get to deny coverage to adults with pre-existing conditions for the next four years. They'll also get to cap an individual's annual health care reimbursements for the next four years. And if they break the pre-existing ban that was passed last night, they'll only be fined $100 a day! And, the best part? The law will require all citizens who aren't poor or old to write a check to a private insurance company. It's truly a banner day for these corporations.

So don't feel too bad. We're a long way from universal health care. Over 15 million Americans will still be uncovered -- and that means about 15,000 will still lose their lives each year because they won't be able to afford to see a doctor or get an operation. But another 30,000 will live. I hope that's ok with you.

If you don't mind, we're now going to get busy trying to improve upon this bill so that all Americans are covered and so the grubby health insurance companies will be put out of business -- because when it comes to helping the sick, no one should ever be allowed to ask the question, "How much money can we save by making this poor bastard suffer?"

Please, my Republican friends, if you can, take a quiet moment away from your AM radio and cable news network this morning and be happy for your country. We're doing better. And we're doing it for you, too.

Yours,
Michael MooreMMFlint@aol.comMichaelMoore.com
P.S. I'll have more to say on this tonight, live on CNN, at 9pm ET. I'll be talking with Larry King about the health care bill and where we go from here, considering we still don't have universal health care.
P.P.S. In case you missed these photos in yesterday's NY Times Sunday Magazine... That's the results of seven years of madness. The Iraq War began its 8th year this weekend. How can we remove more of those responsible for this tragedy in November?

t is Sunday morning. There is supposed to be a vote on health care reform today. I assume that Glenn Beck is ensconced in church and praying madly for failure.

I was not aware that it was Lent until Glenn Beck said that scheduling a vote during Lent and on the Sabbath was an "affront to God." Unlike Republicans in 2005 when they voted on Palm Sunday in the Terri Schiavo matter?

I am not big on churches.

But as it is Lent - maybe the Catholic Bishops could give up two things:

1) Molesting children and covering for those who do.

2) Telling women what to do with their bodies.

Just a thought. Like I said, I'm not big on churches.

I see the Malimpabeck trio figured they could take down an 11-year-old kid - but failed. Here's the story from Les Blumenthal at McClatchy. Marcelas Owens knows how to deal with bullies: "My mother always taught me they can have their own opinion but that doesn't mean they are right."

That kid should run for office.

I don't know what is going to happen today. Everyone tells me HCR will pass by a narrow margin. Maybe.

How the Hell did we get to the point of comforting ourselves with the mantra "It's better than nothing."

I'm going to grab a cup of coffee and watch and wait.

Maybe the Rapture will begin and free up some parking spaces.

Speaking of the Rapture: Sean Hannity is being accused of scamming real Americans. He's being accused by a conservative right-wing blogger, Debbie Schlussel.

William K. Black, associate professor of economics and law at the University of Missouri, Kansas City, teaches White-Collar Crime, Public Finance, Antitrust, Law & Economics. A former financial regulator, he held several senior regulatory positions during the S&L debacle. Black is the author of The Best Way to Rob a Bank Is to Own One (2005) which focuses on the role of “control fraud” in financial crises. Black developed the concept of "control fraud" — frauds in which the CEO or head of state uses the entity as a "weapon." Control frauds cause greater financial losses than all other forms of property crime combined.

You mean NAFTA didn't improve life in Mexico: "Two Drug Slayings in Mexico Rock US Consulate"

What happens when Big Food profits from hurting kids: "Forget Goofing Around: Recess Has New Boss"

There's now a daily parade of news like this -- well, not really "news," more like the media division of large corporations shoving your face into the dirt that is your life. You already know the schools are a disaster and the war is a boon for the Halliburtons and a bust for you. You don't need a newspaper to tell you the roads and electrical lines and the local sewage plant is in miserable disrepair.

And by now you've figured out that you don't really have any say in this, that what we call the "democratic process" is mostly a sham, pretty words that get repeated in the hopes we will all still fall for it. But the fix is in and we don't fall for it anymore. Admit it: Wall Street owns "our" Congress lock, stock and big barrel o' campaign cash. You want a say in this? Well, I don't see you on the Forbes 400, so shut the f@*& up and go fetch me another bottle of bubbly.

Within days, the House of Representatives will vote to pass the Senate health care "reform" bill. This bill is a joke. It has NOTHING to do with "health care reform." It has EVERYTHING to do with lining the pockets of the health insurance industry. It forces, by law, every American who isn't old or destitute to buy health insurance if their boss doesn't provide it. What company wouldn't love the government forcing the public to buy that company's product?! Imagine a bill that ordered every citizen to buy the extended warranty on all their appliances? Imagine a law that made it illegal not to own an iPhone? Or how 'bout I get a law passed that makes it compulsory for every American to go see my next movie? Woo-hoo! Who wouldn't love a sweet set-up like this windfall?

Well, the insurance companies -- get this -- don't like the Democrats' bill! That alone should be reason enough to vote for it.

Now, you would think these thieves would love this bill -- but they are actually fighting it. Why? Because it doesn't give them ONE HUNDRED PERCENT of the what they want. It only gives them... 90%! YOU SEE, pure greed demands all or nothing.

The insurance industry hates this bill because it puts a few minor restrictions on them. Six months after its passage they won't be able to deny children coverage if they have a pre-existing condition. How awful! Government interference! SOCIALISM!

But, hey, they'll still be able to deny these children's parents coverage until 2014! So if a parent gets sick and dies in the next four years, I'm sure someone will step in and raise these already-insured orphans.

And how big will the fines be if the insurance companies do deny someone coverage for having a pre-existing condition? Are you sitting down? A hundred dollars a day! That's it! So if you're the insurance company, and Judy is a customer of yours, and Judy needs an operation that will cost $100,000, what do you do? You take the fine! Let's say Judy lives another year after you've sentenced her to death, your $100-a-day fine will only cost you $36,500! That's a savings of $63,500! And trust me, my friends, that's EXACTLY what's going to happen.

There are some good things in this bill. Parents will be able to keep their children on their policy until the kids turn 26. A few things like that. So, yes, pass that.

But don't insult me and 300 million Americans by calling this "health care reform." At least you've stopped calling it "universal health care." We will not have universal health care or anything close to it. I wish the president and the Democratic leadership would just stand up and say, "We're sorry, America. We didn't get the job done you sent us here to do. We're weak and scared and unable to communicate the simplest of messages to the American people. Therefore, our bill will guarantee that 12 million of you will still have NO health insurance. And that's because we have decided to leave the greedy, private insurance industry in charge of our system. Forgive us for this and for continuing to allow profit to be the determining factor as to whether a patient gets the help she or he needs."

Please, Democrats -- just say that -- then pass this poor excuse of a bill. Pass it because, if President Obama takes a fall on this one, I don't know if he'll be able to get back up. And then NOTHING will get done. We can't have that. (And thank you Dennis Kucinich for hanging in there right up to the end and being the only one out of the 435 members to speak the awful truth.)

On the front page of yesterday's New York Times, the dateline was, sadly, once again, "Flint, Michigan." The story was about how doctors are no longer accepting Medicaid patients. Which means tens of thousands of poor can no longer go to the doctor. Last year, the State of Michigan also prohibited doctors from accepting Medicaid patients who had anything wrong with their vision, their hearing, their feet or their teeth. In a 16-county area northwest of Flint, there will soon be not one single hospital that will allow you to give birth there if you're on Medicaid. The official unemployment rate in Flint is 27% (unofficially, closer to 40%).

This is an American tragedy. And, as I've warned you for years, this tsunami is heading your way -- if it's not there already.

I've just turned on my new iPhone and it informs me that it has "apps" it would like to suggest I buy. One is called "Scanner." It will allow me to listen in on police scanners anywhere across the country. I buy the app. I see that the Flint police scanner is part of this. I turn it on out of curiosity. And this is what I hear, at one in the morning: A woman is being beaten by her husband... A home invasion is taking place ("16-year-old black male, wearing a white skull cap")... A child has been missing since noon today... Another woman is being beaten by her boyfriend... A diabetic, obese man is having trouble breathing and needs to be rushed to the hospital (there will be three more of these obese diabetics in the hours to come; the entire town is ill)... One more woman calling, screaming for help, "officers urged to use caution..."

...And on and on and on. This is what I have listened to before going to bed. I am filled with despair and helplessness as I hear my former neighbors crying out for help. I hate it. I have to turn it off. I start to cry. Thank you, iPhone. Thank you, Democrats. I'll sleep better knowing that you're looking out for all of us.

On Wednesday, March 10, 2010 The BRAD BLOG posted breaking coverage about U.S. District Court Judge Nina Gershon’s finding that day, that the Congressional funding ban on ACORN was an unconstitutional bill of attainder. Her finding included an order to resume federal funding to the community group which has been targeted by a years-long GOP smear campaign.

It's now Wednesday, March 17 --- a full week since the historic ruling was issued by a federal judge (in New York, of all places) yet, not one word about the ruling has appeared in the New York Times, America's so-called "paper of record."

What's wrong with this picture?

As we now know, the NYTimes has misreported the ACORN "Pimp" Hoax story time and again since last fall, yet both their Senior Editor for Standards, Greg Brock, as seen in emails published by The BRAD BLOG, and their Public Editor (ombudsman) Clark Hoyt, as seen in emails also published by The BRAD BLOG, have both refused to issue or recommend corrections despite being shown the gross, factual inaccuracies in the paper's coverage.

Furthermore, Gershon's decision last week heavily referenced a report [PDF] by the former MA Attorney General Scott Harshbarger, released on December 7 of last year, finding no criminality by ACORN workers as seen in the highly-edited, heavily-overdubbed, secretly-taped videos released last year by James O'Keefe and Andrew Breitbart. The publication of those videos led to the unconstitutional legislation undone last week by Gershon. Yet the New York Times has never so much as mentioned the Harshbarger report in its pages either.

So, again, I ask: what's wrong with this picture?

Blogger's Post Script: Monday, March 22. Perhaps goaded by this and/or other posts circulating on the internet, the New York Times Public Editor finally reviewed the ACORN story and the Times' part in it, causing him to admit that the Times had blundered and apologize (sort of) for the fact that their poor reporting might be to some degree responsible for ACORN -- a community service organization that has helped millions of disadvantaged Americans by organizing to confront powerful institutions like banks and developers -- now being on life support.

Monday, March 15, 2010

It's been a brawl for years, this education culture war that seems to take on a particularly vicious turn in the heart of Texas. The latest and most important round, a drastic revision of the social studies curriculum standards to put a conservative spin on history and economics textbooks, was given preliminary approval after a series of heated meetings of the Texas Board of Education that didn't do much to improve the image of the nation's second largest state as a sometimes small-minded political and educational backwater.

In a matter of days last week in Austin, the majority of the 15-member board, insisting they were only trying to offset liberal bias in textbooks, questioned Darwin's theory of evolution and the constitutional principle of separation of church and state; debated hip-hop and genocide in Darfur; deleted Albert Einstein and Thomas Alva Edison from textbooks; emphasized Christian teachings and fundamentalist values; adopted conservative articles of faith like American exceptionalism; promoted right-wing leaders and organizations like Phyllis Schlafly and the National Rifle Association; and refused to give adequate attention to Hispanic and African American contributions to U.S. and Texas history.

To no one's surprise, on the final round on Friday, the conservatives pulled a decisive victory, 10-5 -- a tally that broke along predictable party lines, Republicans to the right, Democrats to the left. Ethnic minority members stood on the losing side. According to published reports, no experts on the social sciences were consulted. Given the conservative cast of the board, whose members are elected, the changes it has proposed will stand when the final vote is taken in May.

Leaving the meeting, a Democratic board member, Mavis Knight, of Dallas, was fulminating, saying, she could not be a party to "perpetrating this fraud on the students of this state." It was not a pretty sight. The board will surely become, or has already become, the butt of jokes on late-night shows and "Saturday Night Live."

But this is not a local squabble or a local issue. It's not a colorful shoot 'em up in the Texas corral. It so happens that the Texas board is perhaps the most influential in the country. Its guidelines will affect not only the 4.7 million Texas public school students but will likely spread to many other states, from kindergarten to 12th grade for the next 10 years. Texas textbook standards are usually adopted by publishers because the state will buy 48 million of them every year, and many other states -- 47 by some counts -- will follow that model. In light of those figures, publishers will happily take their cue from the Lone Star State.

All in all, it has been a turbulent few weeks for public education in America.

On Saturday, President Obama called for major changes in the Bush-era No Child Left Behind law, proposing to measure students' and schools' progress not on test scores alone but also on such metrics as attendance, graduation rates and learning environment, according to the New York Times. The president's educational blueprint, which he will send to the Congress on Monday, will fulfill a campaign promise to overhaul the federal law, which affects the nation's nearly 100,000 public schools, the Times reported.

Obama's move comes after the National Governors Association last week proposed tougher nationwide school standards with an eye to raising the world standing of the United States in math and science education. The proposals, which emphasize writing and reasoning skills, set out to prepare students to succeed in college. Forty-eight states and the District of Columbia participated in setting the proposed standards, according to published reports. But this proposal is just that, a proposal. It's not a done deal.

In Rhode Island, a school board fired the entire faculty of a school that had not been performing up to par. The dismissal of 93 teachers and staff in Central Falls was shocking enough to the community and the school system. But what brought the firings to national attention was President Obama's support of the board's decision, which he saw as a major step in holding schools and teachers accountable.

A storm of charges and counter-charges followed, pitting the powerful teachers unions against the president whose candidacy the unions supported with sweat and money in 2008. Oddly, conservatives and Obama landed on the same side, with conservatives backing the move for holding a school responsible for failure. Whatever the outcome of the controversy, the Central Falls decision is likely to affect hundreds of school districts which are under pressure from the federal government to change or risk losing funds.

Following on the heels of Central Falls, the city of Boston demanded that staff members at six failing schools reapply for their jobs. The city was acting, like Central Falls, to meet the requirements of the Obama Administration's turnaround program, which expects failing schools to change by lengthening the school day, converting to charter schools, firing staff, or closing altogether.

The Kansas City Board of Education didn't have to pick among those choices when it voted on Wednesday to close half the city's public schools -- not necessarily because the schools were performing poorly, but because the system faced falling enrollment, smaller budgets and a $50 million deficit. They call it the Right-Size plan, and it will close 28 of the city's 61 schools and trim 700 of 3,000 jobs. Where the school children will go, no one really knows. For Kansas City, it was yet another blow to its public schools.

Back in Austin, initial reports of the board vote on Friday drew a flood of comments on the web site of the Austin American-Statesman. One of the earlier salvos -- "them white folks sure is crazy!" -- spoke volumes for the one side. It echoed the words of a frustrated board member, Mary Helen Berlanga, who was quoted by the New York Times as saying as she walked out of a meeting, "They can't just pretend this is a white America, and Hispanics don't exist."

Saturday, March 13, 2010

Are we finally in a recovery? Who’s “we,” kemosabe? Big global companies, Wall Street, and high-income Americans who hold their savings in financial instruments are clearly doing better. As to the rest of us – small businesses along Main Streets, and middle and lower-income Americans – forget it.

Business cheerleaders naturally want to emphasize the positive. They assume the economy runs on optimism and that if average consumers think the economy is getting better, they’ll empty their wallets more readily and – presto! – the economy will get better. The cheerleaders fail to understand that regardless of how people feel, they won’t spend if they don’t have the money.

The US economy grew at a 5.9 percent annual rate in the fourth quarter of 2009. That sounds good until you realize GDP figures are badly distorted by structural changes in the economy. For example, part of the increase is due to rising health care costs. When WellPoint ratchets up premiums, that enlarges the GDP. But you’d have to be out of your mind to consider this evidence of a recovery.

Part of the perceived growth in GDP is due to rising government expenditures. But this is smoke and mirrors. The stimulus is reaching its peak and will be smaller in months to come. And a bigger federal debt eventually has to be repaid.

So when you hear some economists say the current recovery is following the traditional path, don’t believe a word. The path itself is being used to construct the GDP data.

Look more closely and the only ones doing better are the people and private-sector institutions at the top. Many of America’s biggest companies are sitting on huge amounts of cash right now, but that says nothing about the health of the U.S. economy. Companies in the Standard&Poor 500 stock index had sales of $2.18 trillion in the fourth quarter, up from $2.02 trillion last year, and their earnings tripled. Why? Mainly because they’re global, and selling into fast-growing markets in places like India, China, and Brazil.

America’s biggest companies are also showing fat profits and productivity gains because they continue to slash payrolls and cut expenditures. Alcoa, for example, had $1.5 billion in cash at the end of last year, double what it had on hand at the end of 2008. Sounds terrific until you realize how it did it. By cutting 28,000 jobs – 32 percent of workforce – and slashed capital expenditures 43 percent.

Firms in S&P 500 are now holding a whopping $932 billion in cash and short-term investments. And they can borrow money cheaply. Corporate bond sales are brisk. So far in 2010, big U.S. corporations have issued $195.2 billion of debt, excluding government-guaranteed bonds. Does this spell a recovery? It all depends on what the big companies are doing with all this cash. In fact, they’re doing two things that don’t help at all.

First, they’re buying other companies. (Walgreen last month spent $618 million for New York drugstore chain Duane Reade; Bank of New York Mellon, $2.3 billion for PNC Financial Services; Monster, $225 million for jobs.com; Diamond Foods, $615 million for Kettle Foods.) This buying doesn’t create new jobs. One of the first things companies do when they buy other companies is fire lots of people who are considered “redundant.” That’s where the so-called merger efficiencies and synergies come from, after all.

The second thing big companies are doing with all their cash is buying back their own stock, in order to boost their share prices. There were 62 such share buy-backs in February, valued at $40.1 billion. We’re witnessing the biggest share buyback spree since Sept 2008. The major beneficiaries are current shareholders, including top executives, whose pay is linked to share prices. The buy-backs do absolutely nothing for most Americans.

(None of this, by the way, is stopping supply-side fanatics from arguing government needs to cut taxes on big corporations in order to spur the recovery. Their argument is absurd on its face. Big companies don’t know what to do with all their cash they have as it is. They aren’t investing it in new plant and equipment and new jobs. So why should the government cut their taxes and enlarge their cash hoards even more?)

The picture on Main Street is quite the opposite. Small businesses aren’t selling much because they have to rely on American – rather than foreign – consumers, and Americans still aren’t buying much.

Small businesses are also finding it difficult to get credit. In the credit survey conducted in February by the National Federation of Independent Businesses, only 34 percent of small businesses reported normal and adequate access to credit. Not incidentally, the NFIB’s “Small Business Optimism Index” fell 1.3 points last month, just about where it’s been since April.

That’s a problem for most Americans. Small businesses are where the jobs are. In fact, small businesses are responsible for almost all job growth in a typical recovery. So if small businesses are hurting, we’re not going to see much job growth any time soon.

The Federal Reserve reported Thursday that American consumers are shedding their debts like mad. Total US household debt, including mortgages and credit card balances, fell 1.7 percent last year – the first drop since the government began recording consumer debt in 1945. Much of the debt-shedding has been through default – consumers simply not repaying and walking away from homes and big-ticket purchases.

This is hardly good news. But here’s the Wall Street Journal’s take on it: “the defaults are leaving many people with more cash to spend and save, jump-starting the financial rehabilitiation” of the economy.

Baloney. As of end of 2009, debt averaged $43, 874 per American, or about 122 percent of annual disposable income. Most economic analysts think a sustainable debt load is around 100 percent of disposable income – assuming a normal level of employment and normal access to credit. But unemployment is still sky-high and it’s becoming harder for most people to get new mortgages and credit cards. And with housing prices still in the doldrums, they can’t refinane their homes or take out new loans on them. The days of homes as ATMs are over.

Some cheerleaders say rising stock prices make consumers feel wealthier and therefore readier to spend. But to the extent most Americans have any assets at all their net worth is mostly in their homes, and those homes are still worth less than they were in 2007. The “wealth effect” is relevant mainly to the richest 10 percent of Americans, most of whose net worth is in stocks and bonds. The top 10 percent accounted for about half of total national income in 2007. But they were only about 40 percent of total spending, and a sustainable recovery can’t be based on the top ten percent.

Add to all this the joblessness or fear of it that continues to haunt a large portion of the American population. Add in the trauma of what most of us have been through over the past year and a half. Consider also the extra need to save as tens of millions of boomers see retirement on the horizon. Bottom line: Thrifty consumers are doing the right and sensible thing by holding back from the malls. They saved a little over 4 percent of their disposable income in fourth quarter of 2009. In the months or years ahead they may save more.

Right and sensible for each household but a disaster for the economy as a whole. American consumers accounted for 70 percent of the total demand for goods and services in the American economy before the Great Recession, and a sizable chunk of world demand.

So what happens when the stimulus is over and the Fed begins to tighten again? Where will demand come from to get Main Street back, create jobs, raise middle class wages? Not from big businesses. Certainly not from Wall Street. Not from exports. Not from government.

So, where? That question is the big unknown hanging over the U.S. economy. Until there’s an answer, an economic “recovery” for anyone other than big corporations, Wall Street, and the wealthy is a mirage.

Robert Reich is Professor of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He has written twelve books, including "The Work of Nations," "Locked in the Cabinet," and his most recent book, "Supercapitalism." His "Marketplace" commentaries can be found on publicradio.com and iTunes.

About Me

B.S. in Physics, Carnegie-Mellon University, 1960 Ph.D. in Physics, Brown University, 1966. Fellow, American Physical
Society. Fellow, American Association for the Advancement of Science.
Fellow, American Ceramic Society. Member, Geological Society of America, Research Physicist at Naval Research Laboratory (NRL), Washington, DC,
1967-2001. Fulbright-García Robles Fellow at Universidad Nacional
Autónoma de México, 1997. Invited Professor of Research at Universités
de Paris-6 & 7, Lyon-1, et St-Etienne (France) and Tokyo Institute
of Technology, 2000-2004. Adjunct Professor of Materials Science and
Engineering, University of Arizona, 2004-2005. Consultancy: impactGlass
research international, 2005-present.
Winner, one national and two international research awards and honored
by Brown University with a "Distinguished Graduate School Alumnus
Award." Author, 198 papers in peer-reviewed journals and books, Principal Author of 114 of these.